IndexIQ has launched the first exchange traded fund that targets the mid-cap segment of emerging markets.

IQ Emerging Markets Mid-Cap ETF (NYSEArca: EMER) tracks the performance of mid-cap stocks listed in 20 emerging markets countries. [ETF Chart of the Day: Emerging Markets.]

“Just as it is important for investors to diversify across the capitalization spectrum in their domestic portfolios, the same holds true for investors allocating to emerging markets,” said Adam Patti, CEO of Index IQ. “Prior to EMER, only the large and small-cap sectors of the emerging market landscape were available to investors.” [Emerging Markets ETFs Could Be on Course For Turn Around.]

Many U.S. investors look to emerging markets for uncorrelated returns and diversification, Patti told Bloomberg Television. However, large-cap emerging markets ETFs hold a lot of exporters that are linked to developed markets such as the U.S., he said.

Mid-cap stocks are a “purer play” on the home economies of emerging markets that have higher dividend yields, while the new ETF has different sector allocations than large-cap funds,Patti added. [Emerging Market ETFs Get Boost from Consumer Base.]

EMER has an expense ratio of 0.75%.

Tisha Guerrero contributed to this article.

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